Its training campus in Mysore, a two-hour drive from its sprawling headquarters in Bangalore, can house about 15,000 people. New recruits spend up to six months honing their skills as Infosys attempts to fill the gaps left by inadequate college education.

Goldman Sachs counts the lack of quality education as one of the 10 factors holding India back from rapid economic growth. Analysts say it raises costs, including salaries as firms vie for the best IT recruits, and reduces firms’ competitive edge.“Ideally, education should happen in colleges, it should not be happening on company campuses,” Infosys Head, Education & Research Srikantan Moorthy said. Infosys, whose Campus Connect programme in 430 colleges is aimed at ‘industry ready’ recruits. “But a gap does exist, and we can’t wait for the government to put in place an education system that addresses our needs.” There are growing cries to revamp India’s education system, which focuses on learning by rote. The calls for reforms include opening up primary and secondary education to private investment, easier entry of foreign universities seeking to establish campuses in India and better monitoring and evaluation systems.

It is not the only one: rival Tata Consultancy Services has a faculty development programme in 150 engineering colleges, while Wipro founder Azim Premji has set aside some of his personal wealth for primary education and Anil Agarwal, chief of Vedanta Resources, has committed US$1 billion to a university. India’s Tata Group and Aditya Birla Group set up colleges years ago as acts of social responsibility. Now, multinationals such as SAP, IBM and Cisco are designing curriculum and training faculty to meet their needs.

“The talent gap is compromising their growth big time,” said Boston Consulting Group  (which estimates there was a 30 per cent rise in IT salaries from 2004-06 because of a war for talent between firms) Managing Director Janmejaya Sinha. “It is one of the biggest operational risks they face,” he added. More than half of India’s billion-plus population is below the age of 25, a section referred to as its demographic dividend.

But about 40 per cent of its work force, of about 400 million people is illiterate and another 40 per cent comprises school dropouts, said BCG in a recent report.

High demand

Demand for graduates over the next five years is likely to be 13.8 million. But with only 13.2 million students graduating over the same period, India will face a shortfall of 6,00,000 graduates. About 1.3 million unskilled and unqualified workers will also weigh on the economy over the same period, BCG estimates. “More than one million people lacking the ability to participate in the workforce has the makings of a potential demographic disaster,” Sinha said. “We will have an army of young people left behind and increasingly frustrated with their lot. They not only have the potential to derail India’s growth prospects, but also challenge the basic fibre of our society,” he said. With a literacy rate of 61 per cent, India scores poorly compared to other BRIC nations in terms of average number of years in secondary education.

Rival China already produces more than three times the number of PhDs every year. Home to one of the world’s oldest universities, now only 10 per cent of the roughly 20 million who enrol in the first grade every year finish high school. Female participation is abysmal. With the education sector deemed ‘not for profit’, and limits on private investment in primary and secondary education, there is a thriving cottage industry of coaching centres and tutors. Hundreds of private tertiary colleges charge high fees. Yet, according to critics, many students graduating from these expensive colleges are practically unemployable. The best colleges, including Indian Institutes of Technology and Management were set up more than 50 years ago.